Littelfuse. Inc. (LFUS)- The Cookie Jars Are Full
The company looks set up to benefit from reserve normalization
"Stuffing the cookie jar" is an accounting term that refers to the practice of inflating accruals to abnormally high levels when business is strong, and then boosting future earnings by under-accruing and releasing the excess reserve back into earnings. Our focus is typically on exposing companies that are benefiting artificially and unsustainably from the latter part of this process. However, we sometimes identify companies whose earnings have been penalized by building above-normal accruals and are now poised to benefit as these reserves normalize.
We believe Littelfuse (LFUS) is one such company. In the case of LFUS, we do not view this situation as self-inflicted but rather as a byproduct of extraordinary conditions over the past few years. Regardless, we believe the company may be positioned to experience significant earnings tailwinds that many on Wall Street may not yet anticipate.
Let’s get behind LFUS’s numbers…
(Contact behindthenumbers@btnresearch.com for questions regarding our institutional research service.)